Specialty Podcast: Evolving Risk in the Power, Utility and Renewable Industry

Intro (00:00):
You're listening to the Alliant Specialty Podcast, dedicated to insurance and risk management solutions and trends shaping the market today.

Rob Bothwell (00:09):
Welcome back everyone to another Alliant Specialty Podcast. I'm Rob Bothwell, the managing director of Alliant Power Team. I have with me today, Derek Whipple, Senior Vice President and one of our senior leaders within the power team, responsible for a multitude of things, including client relations, client marketing, client service and just about anything else that you can think of. Also with us is Edward Stewart. Ed is new recently to our power team joining within the last two months and has a very interesting background. Ed is responsible for again, more client service and helping us grow the overall power team and bring our services, which we consider to be extremely different and stand out compared to a lot of our competitors. So with that, Derek, you tell everybody a little bit about yourself and introduce yourself please.

Derek Whipple (01:04):
Thanks, Rob. As you mentioned, my name is Derek Whipple, just a little bit of background on me. I have been in the industry segment for about 28 years now. The last 20 of which have been almost exclusively dedicated to the power space. I started my career in the engineering side of things and started out as a loss control engineer for a very large insurance company, moved into the underwriting side of the business, and then ultimately became a broker about 24 years ago. Now I've had a number of different roles within the broking side of the business, including property broking, leading broken teams, client management of large power accounts, etcetera, and probably have had direct or indirect involvement with well over 80 to 90 different power companies with a pretty diverse set of backgrounds in terms of generation mix, hydrothermal renewals, etc. I joined Alliant about 19 months ago with the goal of really kind of expanding our team with power experts and ultimately helping to build on the success that Alliant had already enjoyed in the space. So happy to be here. And with that, I'll turn it over to Ed to introduce himself.

Edward Stewart (02:06):
Thanks, Derek. My early career was in the British military. I served as a Royal Marines commando in the early 2000s in what was probably the most kinetic time for any military force in the world. So if that wasn't enough excitement for me, I left and subsequently worked in Africa, Asia around the middle east, often in complex and pretty challenging environments, enabling safe business operations. And it was those experiences that led me to my more recent insurance career. And I'm very excited to be spending the next chapter at Alliant as part of the power and energy group.

Rob Bothwell (02:43):
Derek, I think it'd be helpful if you could explain what it was about Alliant that brought you here, you had, obviously a very successful career prior to this. What made you make the change and what is it about Alliant that drew you here?

Derek Whipple (02:59):
From my perspective, having been in the industry a long time, I think I've seen a lot and had the good fortune of working with a lot of different kinds of clients. And really it came down to, I would say probably four things. The first thing was really the vision of Alliant with respect to power and kind of what the company was looking to do both in terms of investments, long term commitments to what we're trying to do and the willingness to hire some of the best talent in the industry and the company wasn't afraid and continues to not be afraid to make those investments. So, clearly that vision is first and foremost in my mind, since I have been a power guy for the bulk of my career. The second thing is really probably the structure of the organization. We truly have no geographic boundaries within power. Our group includes, broking people, claims people, loss control, service people, all facets of managing our client relationships. And I would say that most other companies certainly have some combination of national and local geographies that I've seen create some issues with respect to servicing our clients. So again, I feel like we're one of the only companies, quite frankly, in the power space that has a true, no geographic boundary approach to the power model. So, to me that was very attractive. Having seen it work kind of a number of different ways at other organizations. The third thing that I thought was very, very compelling for me personally, was the fact that we're privately held independent, and really majority owned by our employees. Why does this matter? To me, why it matters is it allows us to make decisions for the business. It allows us to make better decisions for our clients because we all have a vested interest in the success of the business. If the business does well, we all do well. So I think there's a clear alignment between our business model and the employees and ultimately servicing our clients. And then the fourth reason, which is certainly not last on purpose. We are client-facing as an organization, and I've seen that within Alliant at all levels of the organization. And to me, that was a very intriguing approach to the business model. Again, having seen a number of different business models, all of which have their own levels of success. There was definitely some hierarchy involved and many organizations where we simply don't have that. What we have is throughout the organization is everyone is client-facing. Everyone works with clients. And I think, again, that just creates a better awareness throughout the organization for what everybody's doing, how everybody's taking care of their clients, and allows us to make their decisions for our clients. So, really those four things were kind of the crux of the matter if you will, for my decision to move to Alliant.

Rob Bothwell (05:33):
And I think you're right, and we've worked very hard to build a power team that is very different than what we have seen out there. And we've all come from other firms and learned from that and know what we want to build. And I think we've been able to achieve that here at Alliant and Alliant has given us that freedom and that reinvestment to continue to grow. We have now expanded into other areas of power generation. Having initially had a lot of success in the IPP field and all facets of power generation there, enormous growth now in the renewable side. And now we're seeing our book grow in the municipal utility and the public utility side with the expertise that you and some of the others bring. We're very proud of that. And I think that the model and our real focus on engineering and the technical side and leading with the technical side, leading with our engineers our four professional engineers, that whole engineering team that we have as part of our staff has been a giant part of this. So, Ed, same question to you. What was it about Alliant that brought you here? You also had a very successful career at another insurance broker and obviously a very interesting background prior to that. What is it about Alliant, that made you come here and leave that position?

Edward Stewart (06:54):
Yeah, thanks Rob. If it doesn't sound too corny, I would say a large reason that I decided to move to Alliant was my meetings and engagements with you and with Derek, as I said back then, I firmly believe the winds of change are blowing in favor of organizations that get behind sustainability of the planet. And I recognized the huge investment in human capital that Alliant was making. And as a leader in the utility scale, renewable development industry, it just made most sense and was a great opportunity for me to begin the next chapter of my career with a team that we're already heavily invested in this area. I saw a huge growth opportunity, and I was really excited by the prospect of being part of that growth and continued support to clients.

Rob Bothwell (07:50):
Thanks, Ed. That's fantastic and you're absolutely right. That is how we are set up and now our entire focus is doing the best possible job we can for our clients and bringing new ideas, being on the cutting edge of solutions for the risks that we're seeing. There are new risks that are making themselves known to us every day. We're helping with our clients in financing projects and getting past some of the new issues that have come up. Obviously the convective storm issues, we have found some really creative solutions for that. And some of the things Derek described about our team has given us that ability to do those things. And I think we're going to continue to grow with all of these changes we're seeing, obviously there's a lot of specialty insight that comes along with that. Derek, you've been in the midst of all of it, and you've been heavily involved with me and other parts of the team coming up with a lot of these solutions. Give us your thoughts on some of these new risks that we're seeing and some of the things we're doing to effectively solve them for our clients.

Derek Whipple (08:55):
Sure. I think, in terms of evolving risks, I think before you get into that, it's actually important to take a step back and ask maybe historically, what we've seen over the last few years, because I think that tees up where we're headed. Historically, there's been a tremendous amount of change in the past few years. And I don't have to tell anybody, listening to this podcast that that's in fact happening because you've all probably experienced it in some way, shape or form. And really what I would say, the driver behind most of the tremendous change over the last several years has been loss activity in the segment. And if we go back historically up till a couple of years ago, I think it would be fair to say that the industry as a whole, the loss activity was greater than the amount of premium that we're coming into the market on average. So then obviously the industry had to make some very difficult decisions and adjustments, terms, conditions, pricing, all of the above to accommodate that, and create a sustainable market for PowerGen business. So, with that sort of backdrop, the question is, where are we going now? And maybe what are some of the challenges the next three or four years? And I see a few things. I mean, I think a couple of the obvious ones are certainly valuation, right? I think valuation of assets is top of mind right now with the market. Rightfully so, quite frankly, the next thing I would say sort of challenges is one that we've been dealing with for quite some time.

And I'm not sure we have a great answer for you and that's aging infrastructure. We are starting to see some investments in this space, where we're involved in some large overhead transmission and distribution line projects as a company we've been involved in a few of those recently. So, we're starting to see some of that investment take place much more of that needs to occur over the next bunch of years in order to sort of manage the next phase of our industry segment. So, aging infrastructure continues to be an issue for us. And then I would say that the biggest issue that I think we're going to have to face as an industry, and it's not a problem. It's just a fact, and that is the introduction and the continued introduction, rather of large scale renewables into the market. And to me, there's a bunch of things that come along with that, right? It changes market dynamics. It changes operating profiles for the existing fleet of generation assets, potentially. Certainly the loss activity in the renewable space has been much higher than in the past. And some of that's a function of just scale, right? I mean, the industry has grown. There's a lot more units out there. There's a lot more project. And quite frankly, more cap prone sites are being selected for installation of projects, largely due to geographic constraints. So, all of those things are happening. And so we're starting to see a bit more loss activity within that segment, and creating some challenges for that particular area as well. So we've got a lot of things going on in the segment. If I had my crystal ball, I would say that the next several years are going to be a period of continued change. I think that's a fair statement and an accurate statement. Having said, all of that, I do think the industry has poised well to deal with the challenges and the risks going forward. Certainly we as a company have made significant investments in a number of areas that we can certainly get into to help our clients address those particular issues as we go forward. But overall, I do think it's an exciting time to be in the power space and I’m certainly happy to be part of that.

Edward Stewart (11:58):
Thanks for sharing those amazing insights, Derek, and I'm certain, everybody listening has been nodding their head. Like I have been, I think a few things I would add is an ever shifting regulatory framework and uncertainty as to what the future looks like. And I think where a lot of our clients will be looking for leadership and for some guidance around will be tax credits and how the use of tax credit insurance instruments are able to help remove some of the friction involved in utility scale, renewable development. I think the constrained supply chain, which was already exacerbated by the pandemic and more recently global tensions is probably causing a lot of clients, continued heartburn. One thing I'm hearing a lot of interest from clients is around emerging technologies and especially the battery storage systems and how as there is an increase in solar development and the co-location of these new technologies, what that means to a client's portfolio.

But I think really above everything, what separates us, or I think what makes Alliant approach unique is that we recognize that the only thing that makes our clients the same is that they are all different. And we talk about this within the team, and that is about what client first principles really means to us. And to me, I think at the top of the list is the ability to listen. And rather than talking at a client, telling them about a library of solutions or products that are available, it's really about listening to them, understanding what challenges they're facing in their day to day business, and then coming to them with a solution that may or may not include insurance, but is perhaps a lesson learned from an industry peer or through our own individual experiences that helps enable the development of renewable energy projects.

Rob Bothwell (14:04):
Well, thank you very much Derek, and thank you, Ed, some really interesting things today. And thank you for joining Alliant. I'm really looking forward to your success here and our continued success as a team on behalf of our clients and our client success. Thank you everyone for listening, and please feel free. If you'd like more information to visit www.alliant.com/power. And we look forward to our next podcasting talking to you again soon. Thank you.